Wüest Parter RE ESG-Rating establishes itself in the financial industry
February 2, 2023
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PSP Swiss Property Ltd launched its own Green Bond Framework on November 8, 2022. This makes PSP Swiss Property the first company listed on the Swiss stock exchange to convert all its existing bonds into Green Bonds. As the basis for the Green Bond Framework, PSP has chosen the innovative sustainability rating RE ESG-Rating, developed by Wüest Partner, which is thus establishing itself further as a rating method in the Swiss financial and real estate industry.
Shares of PSP Swiss Property, a public company, have been available for trading on the SIX Swiss Exchange since March 2000. It owns one of the largest real estate portfolios in Switzerland and mainly invests in office and commercial properties in prime central locations in major Swiss cities. The Green Bond Framework will lower PSP’s cost of capital and emphasizes the company’s commitment to sustainability.
Reclassification of existing financing into Green Bonds has already been practiced in the EU. In Switzerland, this has now been realized for the first time. With its Green Bonds, which have a current market value of approximately CHF 1.8 billion, PSP is also by far the largest Green Bond issuer in Switzerland.
In order to implement the Green Bond Framework, PSP first had its portfolio evaluated to identify how much of it already met the relevant sustainability criteria. Wüest Partner was commissioned to conduct a sustainability analysis of all properties in the PSP portfolio.
For this assignment, Wüest Partner relied on the RE ESG-Rating product, an internally developed solution that combines portfolio and property perspectives in the assessment of ESG parameters. Properties are evaluated individually based on a current total of 76 parameters and are assigned scores between 1 (poor) and 5 (excellent) using a standardized evaluation matrix. These parameters are combined into indicators, which in turn are assigned to the main ESG rating criteria. This form of quantified assessment allows the corresponding scores to be shown at each level of aggregation and objectively compare properties and portfolios. Thanks to Wüest Partner’s broad database and standardized procedures, Wüest Partner was able to assess all PSP properties comprehensively within a comparatively short period of time.
In order to qualify as a Green Asset, PSP stipulated that a property must have an overall Wüest Partner RE ESG-Rating score of at least 3.5 and its actual CO2 emissions per square meter and year must not exceed a specific threshold. The latter is currently 12 kg/m2a and, in line with PSP’s sustainability strategy, is subject to periodic reduction until CO2 neutrality is achieved in 2050.
With these parameters, PSP’s Green Bond Framework has been verified and recognized by the independent third parties ISS and Moody’s, in the form of so-called second-party opinions. Both ISS and Moody’s are among the world’s largest providers of second-party opinions in the sustainability field. As part of the assessment process, both stated that the criteria used by the PSP met the requirements of Green Bond standards. Consequently, RE ESG-Rating was indirectly confirmed as an adequate rating method for Green Bond issuance.
With this project, RE ESG-Rating by Wüest Partner has further established itself as a rating method in the Swiss financial and real estate industry. We strongly believe that this innovative rating increases the transparency of ESG criteria in the real estate sector and helps market players to make informed decisions.
Further information:
https://www.psp.info/en/sustainability/sustainability-capital-markets-day
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